It has been a little over one year since President Trump
signed into law the Senior Safe Act of 2018 (“Act”) (here).
Enacted as part of the Economic Growth, Regulatory Relief, and Consumer
Protection Act, the Act is designed to “enlist[] financial institutions as
allies in the fight against financial abuse of older adults by allowing banks,
credit unions, investment advisers and brokers to report suspected fraud to law
enforcement without fear of being sued, as long as they have trained their
employees in how to detect suspicious activity.” See Victoria Sackett, “New Law Targets Elder Financial Abuse.”
(AARP May 24, 2018 (here).)

To mark the one-year anniversary of the Act, the Securities
and Exchange Commission (“SEC”), the North American Securities Administrators
Association (“NASAA”), and the Financial Industry Regulatory Authority (“FINRA”)
have issued a fact sheet to increase awareness “among broker-dealers,
investment advisers, and transfer agents of the Act and how the Act’s immunity
provisions work.” (The SEC’s announcement can be found here.) The fact sheet
provides information on the immunity and training provisions of the Act, as
well as additional resources from the SEC, NASAA, and FINRA.

The Act was modeled after a Maine statute with a similar
name, the Senior$afe Program. That program was the result of a joint effort
between regulators and the financial and legal communities to help financial and
banking advisors identify and prevent the financial abuse and exploitation of
seniors and vulnerable adults. Like the Senior$afe Program, the Act was
intended to “empower and encourage our financial service representatives to
identify warning signs of common scams and help prevent seniors from becoming
victims.” See statement by Sen. Susan
Collins (R-Maine), co-author of the Senate version of the Act (here).
It gives “financial professionals—those on the front lines who can best spot
fraud and abuse—the tools they need to safely and securely take steps to
protect seniors and their life savings.” Id.
(quoting Sen. Claire McCaskill (D-Missouri), co-author of the Act).

According to AARP, “[o]ne in 5 older Americans are victims
of financial exploitation each year.” (Here.)
These “victims lose $3 billion annually, or more than $120,000 apiece, ‘the
amount a typical 50-plus household has in retirement savings.’” See 2016 report by the AARP Public
Policy Institute (here).

The Act provides immunity under bank privacy laws to banking
and financial institutions (i.e., a
“covered institution”) for reporting suspected financial abuse and exploitation
of seniors and vulnerable adults to a “covered agency” (i.e., a state regulatory agency, the SEC, “a State or local agency
responsible for administering adult protective service laws,” and a law
enforcement agency). Notably, the Act neither requires reporting financial
abuse and exploitation nor the implementation of educational and training
programs to detect and stop such activity. Thus, to encourage the training
necessary to identify and report suspected abuse and exploitation, the Act conditions
the grant of immunity on the provision of educational and training programs by
the participating financial and banking institutions.

Under Section 303(b)(2)(A)(ii)-(iv) of the Act, the training
must: (1) instruct “how to identify and report the suspected exploitation of a
senior citizen internally and, as appropriate, to government officials or law
enforcement authorities, including common signs that indicate the financial
exploitation of a senior citizen”; (2) “discuss the need to protect the privacy
and respect the integrity of each individual customer of the covered financial
institution,” and (3) “be appropriate to the job responsibilities of the
individual attending the training.”

Training for current employees should be conducted “as soon
as reasonably practical.” Section 303(b)(2)(B)(i). For an “individual who
begins employment, or becomes affiliated or associated, with a covered
financial institution after the date of enactment of th[e] Act”, training
should be conducted “not later than 1 year after the date on which the
individual becomes employed by, or affiliated or associated with, the covered
financial institution.” Section 303(b)(2)(B)(ii). The Act also requires the
covered institution to maintain records showing the individuals who completed
the training and the content of the training provided. Section 303(b)(2)(C).

Commenting on the one-year anniversary of the Act and the
issuance of the fact sheet, SEC Chairman, Jay Clayton, stated: “Financial
professionals can provide a critical frontline role in identifying and
reporting senior financial exploitation. The SEC strongly encourages
broker-dealers and investment advisers to train their personnel in accordance
with the Senior Safe Act. We also encourage all investors, including our most
vulnerable, to ensure they are dealing with a registered investment
professional.”

Michael S. Pieciak, NASAA President and Vermont Commissioner
of Financial Regulation, also commented on the anniversary of the Act and the
issuance of the fact sheet, stating: “In reminding broker-dealers and
investment advisers of the Senior Safe Act’s important immunity provisions, we
hope to encourage firms to train their employees on how to detect and report
suspected senior financial exploitation. Early detection and reporting are
critical to help prevent elder financial abuse and the devastating financial
and emotional impacts that ensue.”

Finally, FINRA President and CEO Robert Cook marked the
anniversary of the Act and the issuance of the fact sheet by saying: “Protecting
senior investors has long been a top priority for FINRA. The Senior Safe Act
seeks to empower financial professionals to detect and report cases of suspected
abuse of senior investors and we believe it is important to broaden awareness
and understanding of the Act throughout the securities industry.”

[The foregoing statements can be found in the SEC’s
announcement (here).]

Freiberger Haber LLP is a national law firm located in Melville Long Island & New York City. The firm is committed to the zealous representation of its clients and the effective use of their resources in litigation involving business and commercial disputes.